LME Nickel Buying Signals: Monthly Stainless Price Index Bullish, Best Be Hedged

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The monthly Stainless MMI® registered a value of 101 in September, on par with August’s value.

Stainless_Chart_September-2014_FNL

Nickel on the LME still remains flat after four consecutive months. The metal keeps consolidating after the huge run-up in the first quarter and volatility keeps contracting, as does volume traded. This is a constructive price action, as it shows that investors keep holding onto nickel despite the large gains of the first quarter.

3M LME Nickel Since 2013

3M LME Nickel Since 2013

Selling pressure is drying up and soon buying pressure might overcome it as the weak holders exit their positions. Meanwhile, nickel is finding support near $18,000 per metric ton and, as long as it doesn’t drop below that level, the picture remains bullish.

Other base metals such as zinc and aluminum stepped into bullish territory as well. This is a good sign for nickel as it shows that global demand is strengthening. Meanwhile, LME inventories are at their highest levels, which proves again the poor correlation between inventory levels and metal prices.

What This Means For Stainless/Nickel Buyers

There is not much to think about when it comes to nickel. With a strong fundamental story behind it and the technical picture still looking bullish, there is no time for guesses. Buyers should be hedged in case this base metal keeps moving its way up.

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The nickel 3-month price rose 0.2 percent on the LME to settle at $18,810 per metric ton.

The Allegheny Ludlum 316 stainless surcharge decreased by 1.4 percent this month, ending at $1.26 per pound. With a 0.6 percent decline, the price of Chinese primary nickel closed the month at $21,012 per metric ton. The spot price of nickel finished the month at $18,655 per metric ton after dropping 0.6 percent on the LME.

Chinese ferro-chrome held pat last month at $1,351 per metric ton. Last month was consistent for Chinese ferro-moly, which did not move from $23,609 per metric ton. Chinese 304 stainless steel scrap experienced a flat month, staying around $2,670 per metric ton. Prices for Chinese 316 stainless steel scrap remained constant this past month, holding at around $2,621 per metric ton. Hovering around $2,670 per metric ton for the month, Chinese 304 stainless coil remained unchanged. At a price of $4,233 per metric ton, Chinese 316 stainless coil did not budge the entire month.

The Stainless MMI® collects and weights 14 global stainless steel and raw material price points to provide a unique view into stainless steel price trends over a 30-day period. For more information on the Stainless MMI®, how it’s calculated or how your company can use the index, please drop us a note at: info (at) agmetalminer (dot) com.

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